Whenever productive resources are used to make capital goods

Question

Quizplus · Accepted Answer

When productive resources are used to make capital goods, society is giving up current consumption. This means that resources are being diverted from producing consumer goods towards producing capital goods, which will only provide benefits in the future. As a result, the production possibilities curve shifts outward in the long run, but in the short run, there will be a decrease in the production of consumer goods, which means that society will have to give up current consumption.

Whenever Productive Resources Are Used to Make Capital Goods